PMEGP Loan in 2026: Subsidy, Eligibility and How to Apply Online

PMEGP — the Prime Minister's Employment Generation Programme — is the government's main subsidy-linked loan for starting a new micro enterprise. You put in a small share, a bank lends the rest, and the government pays 15% to 35% of the project cost as a subsidy that eventually wipes out that much of your loan. This guide covers what the PMEGP loan scheme is, who qualifies, the exact subsidy maths in rupees, the EDP training rule, documents, the online application and the second loan for growth — checked against the official guidelines as of October 2026.

Quick answer

A PMEGP loan funds a new manufacturing unit up to ₹50 lakh or a service/business unit up to ₹20 lakh. You contribute 5–10%, a bank lends the rest at its normal rate, and KVIC releases a 15–35% margin money subsidy that is adjusted against the loan after 3 years.

• Apply only online on the KVIC PMEGP portal — no paper forms

• Subsidy 15%–35% depending on category and rural/urban location

• Age 18+; VIII pass needed above ₹10 lakh (manufacturing) / ₹5 lakh (services)

• No collateral for loans up to ₹20 lakh

• EDP training (5–10 days) is needed before the subsidy is claimed

What is the PMEGP loan scheme?

PMEGP is a central sector scheme of the Ministry of MSME, running since 2008-09 after merging the old PM Rozgar Yojana and REGP. It is a credit-linked subsidy: there is no subsidy without a bank loan, and no loan under PMEGP for an existing business.

The Khadi and Village Industries Commission (KVIC) is the national nodal agency. Your application is handled by one of the implementing agencies you choose — a state KVIC office, the state Khadi and Village Industries Board (KVIB), or the District Industries Centre (DIC); the Coir Board handles coir units. Banks appraise the project and lend.

The current terms were set when the scheme was extended over the 15th Finance Commission cycle, 2021-22 to 2025-26, with an outlay of ₹13,554.42 crore. That revision doubled the project cost ceilings, treated all Panchayati Raj areas as rural, and added transgender and aspirational-district applicants to the higher-subsidy special category.

Status in 2026: that approved cycle ended on 31 March 2026, but Union Budget 2026-27 provides ₹4,500 crore for PMEGP (up from ₹2,548.66 crore in the revised 2025-26 estimate), and the portal, banks and KVIC continue processing — a July 2026 Lok Sabha reply discussed live processing times. As of October 2026 no cabinet decision or revised guidelines for the new cycle have been published. Treat the figures below as the current rules, and confirm on the portal's notifications before you commit money.

PMEGP at a glance (2026)

₹50 lakh

Max project cost, manufacturing

₹20 lakh

Max project cost, service/business

35%

Highest subsidy

special category, rural

3 years

Subsidy lock-in

kept in a TDR

Who is eligible for a PMEGP loan?

• Any individual aged 18 or above. There is no income ceiling.
• Education: at least Class VIII pass for projects above ₹10 lakh in manufacturing or above ₹5 lakh in service/business. Smaller projects have no education condition.
• New projects only. Existing units, and units that have already received a subsidy under any other central or state scheme, are not eligible for a first PMEGP loan.
• One person per family, where family means you and your spouse.
• Capital expenditure is a must. A project without machinery, equipment or a work-shed isn't eligible.

Some activities are on a negative list and can't be funded: slaughter-meat processing, making or selling intoxicants such as beedi, pan and cigarettes, liquor-serving outlets, toddy tapping for sale, thin plastic carry bags, and plain crop cultivation or plantation. Dairy, poultry, aquaculture, beekeeping and value-added farm processing are allowed, and so is a dhaba serving non-vegetarian food. Pure trading is only permitted in the North-East, LWE-affected districts and the Andaman & Nicobar Islands, or for outlets selling Khadi/village-industry products.

PMEGP subsidy and own contribution

The subsidy depends on two things: your category and where the unit is located. Villages under Panchayati Raj bodies count as rural; areas under a municipality are urban.

PMEGP margin money subsidy (new units)

Category	Your contribution	Subsidy — urban	Subsidy — rural
General	10%	15%	25%
Special (SC/ST/OBC, minorities, women, ex-servicemen, transgender, differently-abled, NER, aspirational, hill and border areas)	5%	25%	35%

General

Your contribution

10%

Subsidy — urban

15%

Subsidy — rural

25%

Special (SC/ST/OBC, minorities, women, ex-servicemen, transgender, differently-abled, NER, aspirational, hill and border areas)

Your contribution

5%

Subsidy — urban

25%

Subsidy — rural

35%

The bank loans the full project cost minus your contribution — typically 90–95%. Land is never part of the project cost. A ready-built or rented shed can be included, but only for up to three years' rent or lease.

Worked examples in ₹

1. Rural woman, spice-grinding unit, project cost ₹20,00,000 (manufacturing, special category)

• Your contribution (5%): ₹1,00,000
• Bank loan: ₹19,00,000
• Subsidy (35%): ₹7,00,000, credited by KVIC to the bank and parked in a term deposit in your name.
• For three years the bank charges no interest on ₹7 lakh of the loan. At a 10% lending rate, that alone is roughly ₹70,000 a year you don't pay.
• After the lock-in and a positive physical verification of the unit, the ₹7 lakh is adjusted against the loan, leaving about ₹12 lakh (less whatever you have repaid) to clear.

2. General-category applicant, urban printing and photocopy shop, project cost ₹10,00,000 (service)

• Your contribution (10%): ₹1,00,000; bank loan ₹9,00,000; subsidy (15%): ₹1,50,000.

3. Project above the ceiling A general-category rural applicant plans a ₹60 lakh manufacturing unit. The subsidy is worked out on the first ₹50 lakh only: 25% = ₹12,50,000. The bank can lend for the extra ₹10 lakh, but no subsidy applies to it.

To see what the remaining loan costs each month, put the post-subsidy amount into the EMI calculator, and check how many sales you need with the break-even calculator.

Interest rate, repayment and collateral

PMEGP has no special interest rate — the bank charges its normal MSME lending rate. Repayment usually runs 3 to 7 years after an initial moratorium the bank sets. The real saving is the zero-interest treatment of the subsidy portion during the lock-in, and then the subsidy itself.

On collateral, the guidelines tell banks not to insist on security for loans up to ₹20 lakh, in line with RBI rules for micro and small enterprise lending. Above that, it's the bank's call; many use CGTMSE guarantee cover, but confirm with your branch before you pick it on the portal.

EDP training: how many days you need

The Entrepreneurship Development Programme (EDP) covers finance, production, marketing, banking and book-keeping basics. It runs online or offline through KVIC/KVIB centres, RSETIs and accredited institutes.

• Project cost up to ₹2 lakh: EDP not mandatory.
• Up to ₹5 lakh: at least 5 days.
• Above ₹5 lakh: at least 10 days.

You don't have to wait for the bank's sanction — you can do EDP any time after applying. Anyone who has already done an EDP of 10 days or more through KVIC/KVIB or a recognised government centre is exempt. The bank can't raise the margin money claim until your EDP certificate is on the portal, so finishing early saves weeks.

How to apply for a PMEGP loan online

Applications are accepted only on the KVIC PMEGP e-portal. Aadhaar is authenticated with UIDAI before you can file.

PMEGP online application, start to finish

1. 1

   Register on the PMEGP portal

   Choose the online application form for a new unit. Enter Aadhaar, name, category, education, address and mobile number. A user ID and password are sent to your mobile.

   Open the PMEGP e-portal
2. 2

   Enter project details and choose your agency and banks

   Fill in the activity, unit location (rural/urban), project cost split into capital expenditure and working capital, your implementing agency (KVIC, KVIB or DIC) and preferred financing banks.

3. 3

   Upload documents and submit

   Upload your photo, project report and certificates. The portal generates a self-assessed score; on final submission you get an Application ID for tracking.

   Tip: Projects up to ₹10 lakh need a score of 50/100 to be forwarded to banks; above ₹10 lakh, 60/100.

4. 4

   Agency scrutiny

   Within five working days the agency's nodal officer should contact you, help correct the application and check it against the negative list. Complete applications go to your chosen bank within three weeks.

5. 5

   Bank appraisal and sanction

   The bank appraises the project and sanctions or rejects it, normally within 30 days. The sanction is also sent to the EDP portal if you haven't trained yet.

6. 6

   EDP, own contribution, first disbursement

   Within 30 working days of sanction, deposit your contribution and EDP certificate with the bank. The bank releases the first instalment and claims the margin money online.

7. 7

   Subsidy in TDR, then physical verification

   KVIC validates the claim and the money is parked in a TDR for three years. After a positive third-party physical verification, it is adjusted against your loan.

In practice it takes longer than the targets suggest. A Lok Sabha reply reported in July 2026 gave national averages of about 58 days at the implementing agency, 70 days for bank sanction and 84 days for KVIC to release the margin money — so budget roughly six to seven months from application to subsidy. If a bank sits on your file, you can complain on the PMEGP grievance portal.

Documents required for a PMEGP loan

PMEGP documents checklist

0/8

• Aadhaar (authenticated on the portal) and PAN
• Passport-size photograph
• Project report with cost of machinery/equipment, work-shed and working capital, plus sales and profit projections
• Caste certificate (SC/ST/OBC) or special-category certificate, if claiming higher subsidy
• Rural area certificate from the competent authority, if the unit is in a rural area
• Education certificate (Class VIII pass) for projects above ₹10 lakh manufacturing / ₹5 lakh service
• EDP or skill-development training certificate (uploaded later if not yet done)
• Quotations for machinery, and rent/lease agreement for the shed if not owned

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Banks may ask for extra KYC, bank statements or a Udyam registration certificate after sanction. Getting Udyam registration done early does no harm — it's free and needs only Aadhaar and PAN.

Second PMEGP loan for upgradation

Once your unit is running well, PMEGP offers a second dose to modernise or expand. It is also open to units set up under REGP or Mudra.

To qualify, the first loan must have been repaid on schedule, the first subsidy must have been adjusted after the 3 years lock-in, and the unit should be profitable with room to grow. There's a separate application form on the portal for upgradation.

Common mistakes that sink PMEGP applications

• Buying a "guaranteed approval" project report. Agencies and banks see templated reports every day. Use real quotations and realistic sales; a weak report is the most common reason for rejection.
• Including land in the project cost. It's excluded; showing it inflates the cost and gets the file sent back.
• Choosing an activity on the negative list — or plain trading outside the permitted areas.
• Skipping EDP until the end. No certificate, no margin money claim.
• Closing or shifting the unit before three years. The subsidy is released only after a positive physical verification at the end of the lock-in.
• Mixing schemes. A unit already subsidised under another scheme isn't eligible, and a PMEGP loan in the past five years rules you out of PM Vishwakarma.

PMEGP vs Mudra vs PM Vishwakarma

PMEGP is the only one of the three that gives a capital subsidy, but it's slower and needs a project report. A Mudra loan has no subsidy but is faster, goes up to ₹20 lakh, and suits existing businesses too. If you're a traditional artisan in one of 18 trades, PM Vishwakarma gives a 5% loan, a toolkit and paid training. Many people start small with Mudra, then use the PMEGP second-loan route to upgrade.

Official PMEGP links

• PMEGP e-portal (KVIC)Apply, track, upload EDP certificate, grievances
• PMEGP guidelines (PDF, state-hosted copy)Subsidy table, eligibility, process, negative list
• PIB: PMEGP continued for 2021-22 to 2025-26Revised limits and subsidy
• Delhi KVIB — PMEGPExample of a state implementing agency page

What to do next

Start with numbers, not forms: list your machinery quotes and monthly costs in the startup cost calculator, work out the EMI on the post-subsidy loan in the EMI calculator, then apply on the portal and book your EDP straight away. If you need money faster or don't need a subsidy, compare with our Mudra loan guide.

This is general information, not legal or financial advice — confirm on the official source or with your DIC, KVIB or bank.

Frequently asked questions

How much subsidy is given under the PMEGP loan?

The margin money subsidy is a share of the project cost: 15% (urban) or 25% (rural) for general applicants, and 25% (urban) or 35% (rural) for special categories such as SC/ST/OBC, minorities, women, ex-servicemen, transgender and differently-abled applicants, NER, hill, border and aspirational districts. It is calculated only on cost up to ₹50 lakh (manufacturing) or ₹20 lakh (service).

Is collateral required for a PMEGP loan?

For loans up to ₹20 lakh, RBI's MSE lending rules (raised from ₹10 lakh for loans sanctioned or renewed from 1 April 2026) say banks must not ask for collateral; the older PMEGP guideline text still mentions ₹10 lakh. For bigger loans, the bank decides — many cover them under the CGTMSE credit guarantee rather than asking for property, but that is the branch's credit decision, so ask before you choose a bank on the portal.

What is the interest rate on a PMEGP loan?

PMEGP does not fix a concessional rate — the bank charges its normal MSME lending rate. The saving comes from the subsidy: the margin money sits in a term deposit for 3 years, and the bank charges no interest on the matching part of the loan during that period. Repayment is usually spread over 3 to 7 years after a moratorium set by the bank.

Is EDP training compulsory for PMEGP?

Yes, for most projects. Projects up to ₹2 lakh need no EDP. Up to ₹5 lakh you need at least 5 days of training, and above ₹5 lakh at least 10 days, online or offline. You can start EDP right after applying; the subsidy claim can't be raised until the certificate is uploaded on the portal.

Can I get a second PMEGP loan to expand my unit?

Yes. An existing PMEGP, REGP or Mudra unit that has repaid its first loan on time, completed the 3 years lock-in and is profitable can apply for an upgradation loan of up to ₹1 crore (manufacturing) or ₹25 lakh (service), with 15% (20% in NER and hill states) subsidy and a 10% own contribution.

Is PMEGP still open in 2026?

The last formal approval covered 2021-22 to 2025-26. Union Budget 2026-27 allocates ₹4,500 crore to PMEGP, so the scheme is funded and applications, sanctions and subsidy releases continue through the KVIC portal. As of October 2026 revised guidelines for the new cycle haven't been published, so check the portal's notifications page or ask your DIC or KVIB office before you spend on a project report.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 7 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Notes on Demands for Grants 2026-27 — Demand No. 68, Ministry of MSME — Ministry of Finance (Union Budget) · accessed 7 October 2026
2. 2.Continuation of PMEGP over the 15th Finance Commission cycle (2021-22 to 2025-26) — PIB (Ministry of MSME), 30 May 2022 · accessed 7 October 2026
3. 3.PMEGP Scheme Guidelines (revised, 15th FC cycle) — Ministry of MSME / KVIC (hosted by Commerce & Industries Dept, Govt of Sikkim) · accessed 7 October 2026
4. 4.Prime Minister Employment Generation Programme (PMEGP) — Delhi Khadi & Village Industries Board · accessed 7 October 2026
5. 5.KVIC disbursed margin money subsidy of more than Rs 300 crore to 11,480 service sector beneficiaries — PIB (Ministry of MSME), 17 Jun 2025 · accessed 7 October 2026
6. 6.PMEGP online portal (KVIC) — KVIC · accessed 7 October 2026
7. 7.Jammu Kashmir tops PMEGP applications, sanctions over 98,000 projects in five years — Kashmir Life, 30 Jul 2026 · accessed 7 October 2026
8. 8.Prime Minister's Employment Generation Programme (daily news analysis) — Drishti IAS · accessed 7 October 2026